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Ault Alliance(AULT) - 2023 Q4 - Annual Report
AULTAult Alliance(AULT)2024-04-16 21:23

Financing Activities - The company raised approximately 177millionthroughthesaleofabout42,382sharesofcommonstockfromthe2022ATMOffering[392].−Thecompanyreceivedgrossproceedsofapproximately177 million through the sale of about 42,382 shares of common stock from the 2022 ATM Offering[392]. - The company received gross proceeds of approximately 3.4 million from the sale of 0.3 million Series D Preferred Shares in the 2022 ATM Preferred Offering[392]. - The company borrowed 18.9millioninprincipalamountoftermloans,whichmaturedin18monthsandaccruedinterestat8.518.9 million in principal amount of term loans, which matured in 18 months and accrued interest at 8.5% per annum[392]. - The loan amount was increased from 18.9 million to 24.3millioninJuly2023[394].−ThecompanyenteredintoaShareExchangeAgreement,resultinginacombinedstatedvalueofthePreferredStocktobeissuedbyROIof24.3 million in July 2023[394]. - The company entered into a Share Exchange Agreement, resulting in a combined stated value of the Preferred Stock to be issued by ROI of 100 million[394]. - Each share of Preferred Stock will be convertible into 40,000 shares of ROI common stock at a conversion price of 0.25[394].−TheholdersofPreferredStockareentitledtoreceivedividendsatarateof50.25[394]. - The holders of Preferred Stock are entitled to receive dividends at a rate of 5% of the Stated Value per annum from issuance until February 7, 2033[394]. - A term note with a principal amount of 1.1 million was issued at a 12% interest rate, with net proceeds amounting to 1.0 million[397]. - A credit agreement was established with Ault & Company for an unsecured credit facility of up to 10 million, bearing interest at 9.5% per annum[397]. - The company issued a convertible promissory note with a principal face amount of 2.2million,convertibleintosharesofcommonstockatapriceequalto902.2 million, convertible into shares of common stock at a price equal to 90% of the lowest volume weighted average price during the five trading days prior to conversion[399]. - A senior secured convertible promissory note was sold to Ault & Company for a total purchase price of up to 17.5 million, with a maturity date of October 12, 2028[401]. - The company entered into a securities purchase agreement with Ault & Company to sell up to 50,000 shares of Series C convertible preferred stock and warrants for a total purchase price of up to 50million[401].−Anadditionalloanamountof50 million[401]. - An additional loan amount of 8.8 million was borrowed, with net proceeds of 7.5 million[397]. - Ault & Company borrowed 36 million and issued secured promissory notes totaling 38.9millionaspartofaLoanAgreementwithinstitutionallenders[403].−AultLendingpurchased1,220sharesofALZNSeriesBPreferredandwarrantsforatotalof38.9 million as part of a Loan Agreement with institutional lenders[403]. - Ault Lending purchased 1,220 shares of ALZN Series B Preferred and warrants for a total of 1.22 million, with the purchase price paid by canceling cash advances[405]. - Ault Lending entered into a note purchase agreement for 2.0millionprincipalfaceamountconvertiblepromissorynotes,soldfor2.0 million principal face amount convertible promissory notes, sold for 1.8 million, reflecting a 0.2millionoriginalissuediscount[407].−AultLendingpurchased780sharesofALZNSeriesBPreferredStockfor0.2 million original issue discount[407]. - Ault Lending purchased 780 shares of ALZN Series B Preferred Stock for 0.8 million, bringing the total investment in ALZN Series B to 2.0 million[408]. - The reverse stock split of Ault & Company's common stock was executed at a ratio of 1-for-25, effective January 16, 2024[404]. - Ault & Company plans to sell four hotels under its subsidiary AGREE, aiming to focus on core businesses and use proceeds to pay off debt[410]. - Ault & Company has increased the dollar amount of Series C Convertible Preferred Stock that can be purchased from 50 million to 75million[409].−Asegregateddepositaccountwasestablishedwithaninitialdepositof75 million[409]. - A segregated deposit account was established with an initial deposit of 3.5 million, requiring minimum balances to increase over time[403]. - Ault & Company anticipates returning value to stockholders after satisfying debt obligations and working capital needs[414]. Revenue and Financial Performance - Total revenue increased by 38.5million,or3338.5 million, or 33%, to 156.4 million for the year ended December 31, 2023, compared to 117.6millionfortheyearendedDecember31,2022[419].−Revenuefromdigitalcurrenciesminingoperationsincreasedby117.6 million for the year ended December 31, 2022[419]. - Revenue from digital currencies mining operations increased by 16.4 million, driven by increased mining activities and a 2% higher average Bitcoin price, despite a 72% increase in average Bitcoin mining difficulty[420]. - Energy revenues rose by 47.1millionprimarilyduetotheacquisitionofCircle8inDecember2022[421].−Revenuesfromlendingandtradingactivitieswerenegative,impactedbya47.1 million primarily due to the acquisition of Circle 8 in December 2022[421]. - Revenues from lending and trading activities were negative, impacted by a 6.2 million impairment related to equity securities and a 5.6millionunrealizedlossfromaninvestment[422].−GIGAsegmentrevenueincreasedby5.6 million unrealized loss from an investment[422]. - GIGA segment revenue increased by 7.5 million, including 2.6millionfromtheacquisitionofGiga−tronicsIncorporated,drivenbydefense−relatedinvestmentsanddemandforelectronicssolutions[423].−SMCrevenuesincreasedby2.6 million from the acquisition of Giga-tronics Incorporated, driven by defense-related investments and demand for electronics solutions[423]. - SMC revenues increased by 7.3 million due to the consolidation of SMC revenue for 11 months in 2023, following its acquisition in June 2022[424]. - TurnOnGreen revenues decreased by 1.3millionduetothecancellationoflargeprojectsthatcontributedtorevenuein2022[425].−Grossmarginsdecreasedto201.3 million due to the cancellation of large projects that contributed to revenue in 2022[425]. - Gross margins decreased to 20% for the year ended December 31, 2023, down from 43% in 2022, affected by negative margins from digital currencies mining and lending activities[426]. Expenses and Impairments - Research and development expenses increased by 4.5 million, primarily for the development of ROI's BitNile metaverse platform[426]. - General and administrative expenses rose by 17.5million,or2917.5 million, or 29%, to 77.8 million, mainly due to costs from new acquisitions and increased corporate aircraft usage[426]. - Microphase recognized a non-cash goodwill impairment charge of 3.2millionduringtheyearendedDecember31,2023,duetoadeclineinsales[431].−SMCalsorecognizedanon−cashgoodwillimpairmentchargeof3.2 million during the year ended December 31, 2023, due to a decline in sales[431]. - SMC also recognized a non-cash goodwill impairment charge of 3.2 million for the year ended December 31, 2022, following adverse changes in the business climate and a significant decline in sales[432]. - GIGA recorded a non-cash goodwill impairment charge of 9.9millionfortheyearendedDecember31,2022,attributedtoasignificantdeclineinsalesandstockprice[435].−AVLPrecognizedanimpairmentchargeof9.9 million for the year ended December 31, 2022, attributed to a significant decline in sales and stock price[435]. - AVLP recognized an impairment charge of 14.0 million related to property and equipment as of December 31, 2023, with the estimated fair value of the property and equipment determined to be 0[435].CashFlowandFinancialPosition−Thecompanyreportednetcashusedinoperatingactivitiesof0[435]. Cash Flow and Financial Position - The company reported net cash used in operating activities of 5.4 million for the year ended December 31, 2023, a significant decrease from net cash provided of 26.5millionin2022[440].−Netcashusedininvestingactivitieswas26.5 million in 2022[440]. - Net cash used in investing activities was 29.5 million for the year ended December 31, 2023, compared to 158.6millionin2022,primarilyduetocapitalexpendituresforBitcoinminingequipment[440].−Netcashprovidedbyfinancingactivitieswas158.6 million in 2022, primarily due to capital expenditures for Bitcoin mining equipment[440]. - Net cash provided by financing activities was 37.0 million for the year ended December 31, 2023, down from 124.1millionin2022,reflectingvariousstockofferingsanddebtpayments[440].−Thecompanyhadcashandcashequivalentsof124.1 million in 2022, reflecting various stock offerings and debt payments[440]. - The company had cash and cash equivalents of 8.6 million as of December 31, 2023, an increase from 7.9millionattheendof2022[438].−InterestexpensefortheyearendedDecember31,2023,was7.9 million at the end of 2022[438]. - Interest expense for the year ended December 31, 2023, was 36.6 million, slightly down from 37.3millionin2022,withsignificantcomponentsincludingamortizationofdebtdiscountandcontractualinterest[438].−Theprovisionforincometaxeswas37.3 million in 2022, with significant components including amortization of debt discount and contractual interest[438]. - The provision for income taxes was 0.3 million for the year ended December 31, 2023, compared to a benefit of $4.4 million in 2022, reflecting a change in the effective tax provision rate[438]. Asset Valuation and Impairment Reviews - The company reviews and evaluates the net carrying value of long-lived assets for impairment based on estimated undiscounted future cash flows and salvage value[444]. - Goodwill and indefinite-lived intangible asset impairment reviews involve estimating fair values using methods such as discounted projected future earnings or cash flow[444]. - Significant management judgment is required in estimating fair value, and actual results may differ materially from forecasts due to inherent subjectivity[444]. - If the carrying value of a reporting unit exceeds its estimated fair value, the excess is charged to earnings as an impairment loss, limited to the carrying amount of goodwill[444]. - The company continuously evaluates its estimates and judgments related to the fair value of financial instruments based on known trends and events[444].